Along Coast, Hurricane Left Housing Market in Turmoil

Alex Rubin, a real estate agent, center, is helping Steve Kaplan, right, and his friend Bob Gregor buy houses in Long Beach, N.Y.Credit
Uli Seit for The New York Times

John Vento knew exactly how much his home was worth. The retired New York City police officer put his two-family house in the New Dorp Beach area of Staten Island on the market for $580,000 in February. Soon after, he refused an offer of $510,000.

But that was before Mr. Vento and his wife watched from the top floor as 10 feet of water ruined the home in which they had raised their three children. Last week, he sold it for $279,000, less than half his original asking price, unable to wait for a better offer.

“I was fortunate to get what I got,” he said. “I’m 72 years old. What am I going to do? Wait until I’m 82? By that time I’d be living in a nursing home.”

The real estate market along the New York and New Jersey coastlines has been as upended by Hurricane Sandy as the houses tossed from their foundations. In places where waterfront views once commanded substantial premiums, housing prices have tumbled amid uncertainty about the costs of rebuilding and the dangers of seaside living.

Homeowners have had to decide quickly whether to sell out or pour more money in to fix storm-damaged homes, as the real estate speculators who have descended on these areas make offers that would have been preposterous just two months ago.

Some owners have indignantly balked and even gone so far as to take houses that were already on the market off, waiting for values to rebound. But many others who lack the means or the desire to rebuild say they have no choice but to try to get out from under these properties for whatever they can.

“They’ve had enough,” said Steve Kaplan, 49, an investment banker from Long Beach, on Long Island, who has been buying damaged properties there since the storm. “They are going to move on, they don’t want to deal, they don’t want to redo their house.”

“There’s an opportunity here,” Mr. Kaplan added, “that you can buy houses for cash because they want to move on very quickly.”

Experts are divided on whether the effects of the storm on property values reflect a new reality for waterside areas or whether prices will come back stronger, as they did in Lower Manhattan, where prices tumbled after the Sept. 11 attacks. Real estate agents are urging patience, worried that entire communities are hemorrhaging value.

In the meantime, a range of real estate prospectors have arrived. A truck advertising a company that buys distressed homes for cash started patrolling the waterlogged neighborhoods along the Rockaways, in Queens, almost immediately after the storm. Signs offering the services of similar companies have cropped up like crab grass in front of supermarkets on Long Island.

And there were so many paltry offers for properties on Craigslist that one person posted: “Real estate is high enough and many are trying to suck the life out of people who have lost homes, cars and all their possessions. Where are your hearts and consciences?”

But the cash-in-hand these companies offer may be too desperately needed for some homeowners to pass up.

Ryan Case, a partner at Seaside Funding, a national “flip company” that often offers 60 percent to 70 percent below market rate for properties, acknowledged that would-be sellers would be wise to ignore his agents’ offers.

“We are not your best option,” he said.

Yet those who find bargain-basement offers tough to swallow — compared with the value their houses had before the storm — sometimes find themselves with little alternative. Mr. Case recounted how one New Jersey woman reacted with outrage at his company’s offer. “She said, ‘I’ll burn the house before I sell it to you guys to make a profit,’ ” he said. But she called back a week later to see if the offer still stood.

There have also been amateur speculators, who see a chance to realize the dream of owning a second home or an investment property.

Photo

Before the storm, James and Susan Chenitz put their home in Rumson, N.J., on the market for $1.85 million. They relisted it for $700,000.Credit
Richard Perry/The New York Times

Mr. Kaplan and his friend Bob Gregor talked for years about buying houses in Long Beach, their hometown. But it was not until a few weeks after the hurricane that they finally went shopping.

On a drizzly afternoon in December, they were still on the hunt. The men stepped into one storm-shredded house after another. One was stripped to its struts and devoid of furnishing, save a forlorn chandelier hanging from a rafter.

“How’s the foundation?” Mr. Kaplan asked.

Mr. Gregor peered through the chinks between the bare floorboards. “Solid,” he said.

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They had already bought a home in a good part of town, damaged but salvageable and $125,000 below market value. On this afternoon, they were scoping out their second. They said they did not see their purchases as exploitative, but as investments in the community when few people are buying homes.

Because many banks have been unwilling to provide mortgages to people seeking to buy in an area at risk for another catastrophe, or even to refinance properties so homeowners can pay for their own repairs, a cut-price cash sale is sometimes the only option. In some cases that is being held up by the pending release of new flood maps.

Alex Rubin, an agent with Douglas Elliman Real Estate in Long Beach, advises clients not to offer or accept rock-bottom prices; he said he feared it could affect long-term property values in the area. Instead, Mr. Rubin subtracts the cost of the needed repairs from what the house’s market value was on Oct. 28, the day before Hurricane Sandy hit. Then he deducts an additional $25,000, what he calls an “inconvenience fee.”

But this formula does not reflect the realities of the market for every homeowner.

Before the storm, Susan Chenitz’s waterfront five-bedroom home in Rumson, on a peninsula in New Jersey, with “all the bells and whistles,” was listed for $1.85 million.

After it took on 20 inches of water, she relisted it for $700,000.

“It’s painful,” Ms. Chenitz, 62, said. “We put it on at an attractive price and hope there is someone willing to take a chance on it.”

Some have decided it is no longer the time to sell. Seventy-one properties have been pulled off the market in the flood zones of Brooklyn and Queens since the hurricane, said Sofia Song, vice president for research at StreetEasy, a listings database. Other listings are being allowed to languish until the surrounding communities are rebuilt.

“The question is, How long will the experience of Hurricane Sandy be in the mind of homeowners and potential buyers?” said Mitchell L. Moss, a professor of urban policy and planning at New York University.

Some deals already in the works have been modified to account for flood damage — or the subsequent repairs. Many more have been scrapped.

In Howard Beach, Queens, Gerald R. Fink, who runs Jerry Fink Real Estate, recently closed a deal on one home only by lopping off $40,000 — the price of repairing damaged heating and cooling systems. But nearby, Steven Pacchiano, a broker at Connexion I Real Estate Services, raised the price of an older ranch house by $50,000, since the flooded bottom floor is being replaced.

“The first floor is going to be brand new,” he said, explaining that the updated fixtures and a new kitchen that were installed added to the home’s value.

Numerous deals have fallen through, as buyers spooked by the devastation have second thoughts.

Eva Zurek, a longtime real estate broker in Red Hook, Brooklyn, said an artist and his wife had long fixated on moving to the waterfront neighborhood. But they not only retracted their offer to buy a $1.23 million brick town house on Wolcott Street after storm waters tore through the lower floor, but also lost interest in the neighborhood entirely.

“They were no longer interested in Red Hook,” she said.

Other deals have held.

Two days after the storm, Joseph Zisa, the city attorney of Hackensack, N.J., called his real estate agent to meet him at the house on the bay in Manahawkin that he was closing on, to see whether it had survived. The porches were gone, and a 107-foot telephone pole lay across the yard, having missed the house by inches. He closed that week at the prestorm price.

A version of this article appears in print on December 28, 2012, on Page A21 of the New York edition with the headline: Along Coast, Hurricane Left Housing Market in Turmoil. Order Reprints|Today's Paper|Subscribe